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Honduran Supreme Court Rejects Claims of ZEDE Unconstitutionality

EspañolAccording to a written verdict from May 26, the Constitutional Chamber of the Honduran Supreme Court has rejected an appeal against the establishment of Zones for Employment and Economic Development (ZEDEs). That came after lawyer Marta Adeline Ávila Sarmiento presented the opposition case on February 8 of this year.

The Honduran Supreme Court fails to find unconstitutionality grounds that would bar the ZEDEs.

According to records accessed by the PanAm Post, Ávila Sarmiento offered 16 arguments for unconstitutionality. In particular, she alleged that the ZEDEs would violate the territorial sovereignty of Honduras, the nation’s form of government, and the general public interest. The construction of the ZEDEs, the lawyer inferred, would be a danger to the personal and legitimate interests of Hondurans — both in the private and public spheres — who have a right to their nationality.

Among other concerns presented by Ávila Sarmiento, she challenged the constitutionality of tax collection in the ZEDEs. Her contention was that only the Honduran Congress has the authority to establish taxes and fees, and to earn seigniorage on the currency. Given that the ZEDEs do not have geographic restrictions, and could potentially be on the border with Guatemala, El Salvador, or Nicaragua, she alleged that the nation could also lose its territorial integrity.

Guillermo Peña Panting, executive director of Eleútera — Honduras’s classical liberal policy institute — explained to the PanAm Post that “The resolution of the [Supreme Court] is the final hurdle towards the legal and political formalization of the Organic Law of the ZEDEs, and in the same manner for the reforms to the Constitution of the Republic approved by the Honduran National Congress with more than 100 votes in favor out of a total of 128 deputies.”

The Drawn-Out Legal Process

After the first venture failed in court, the Honduran National Congress approved on January 23, 2013, a new Law for the Creation of Special Development Regions. With this revised legislation, the Constitutional Chamber of the Supreme Court agreed to review the case from Ávila Sarmiento against the creation of what were now known as ZEDEs, and the chamber sought the input of the Honduran Ministry of the Public.

The lawyer’s argument then targeted Articles 294, 303, and 329 — that the ZEDEs would infringe upon these. Even more than the specific articles, though, she contended that the zones would contradict the unalienable principles of the constitution as the fundamental law of the Honduran territory.

More than 50 NGOs joined with Ávila Sarmiento to file the motion with the Constitutional Chamber against the ZEDEs. At that time, the coalition’s legal representative was Óscar Cruz, and he expressed his dissent on the grounds that the revised law was merely a new coat of paint: a “change of name for the project but not the purpose, to cede national territory to be the property of foreign investors, with their own laws, courts, and tax system.”

Cruz contended that “these cities need not be up for debate, since there exists no prohibition but the same ruling of unconstitutionality that came with the first startup-cities project, which established that the project could not be resumed; however, three months after the sentence, the Congress — with less appreciation for the nation’s constitutionality towards institutional balance — proceeded to approve a second startup-cities project.”

Smooth Sailing for the ZEDEs

The latest resolution from the Constitutional Chamber gives the support necessary to hasten the path forward for the ZEDEs. In this regard, Peña Panting adds, “With this decision, the investors, national developers, and interested foreigners … now have the legal backing necessary to proceed forward with project implementation. The arguments against were, up until now, used to discredit the project, but they have been refuted by a unanimous vote from the final and definitive arbiter of the Constitution of the Republic.”

The Honduran ZEDE delegation is meeting with representatives in South Korea and advancing an agenda from June 11 to 26. These meetings are with both the public and private sector of South Korea, those interested in developing the first startup or “model” city in Honduras. That is according to the National Party deputy from the Valle department, Marcos Velásquez, who is a member of the delegation from the executive branch, the National Congress, and the municipalities of Amapala, Alianza, and Nacaome.

One of the chief points to be addressed by the Honduran delegation will be the results of the feasibility study conducted by the South Korean firm, Posco Plantec. This study was to determine the preferred location for the construction of a ZEDE.

Amapala, Alianza, Nacaome, and San Lorenzo were those preselected to be on the shortlist for examination by the South Korean firm’s experts. These first four locations, it was widely understood, were chosen as prospective hosts given that they are part of the Gulf of Fonseca.

The port set to be the first to construct a startup-city ZEDE is Amapala, given a natural bay with appropriate conditions and depth for the navigation of ships of any size. Amapala is a very small, island town, so the logistics center will likely be 42 kilometers (26 miles) away in Nacaome, the Valle capital. Whether Alianza will play a role, and what that might be, remains to be seen. Similarly, no plans are available for San Lorenzo.

The other key topic for discussion will be the nature of the investment that the South Koreans have in mind for Honduras. The specifics may well dictate the precise startup-city planning for the tailored ZEDE promoted by the Honduran central government.

Adriana Peralta is a freedom advocate from El Salvador and a @CREO_org board member. She is a PanAm Post reporter and blogger, a 2005 Ruta Quetzal scholar, a trained engineer, and an SMC University masters student in political economy. She is also a Pink Floyd fan. Follow @AdriPeraltaM.

Bachelet Returns: 100 Days of Fracturing Chile

EspañolIt's an old saying, that sequels never live up to expectations — at least that's what is generally said about movies. Whether it is true or not is at the discretion of the viewer, but it is clear that in the case of President Michelle Bachelet's administration, the popular saying is spot on.
That's what both the economic figures and public opinion have shown in Chile over recent months.
Upon starting her government on March 11, the president announced 56 measures to be implemented during her first 100 days in office. Admittedly, most of them have been fulfilled. However, fulfilling one's promises is not synonymous with success, or that everything is going well.
In any case, Bachelet started her administration on very different footing than Sebastián Piñera. Unlike her predecessor, Bachelet started working with haste. She was determined to process and set up her project teams, and to date they have much more clarity about what to do and are more empowered than those of the previous administration.
However, perhaps the most striking characteristic of these first 100 days is the atmosphere of confrontation that exists in the country. The temperature is rising; there is tension in the public debate; and there is not much willingness to engage in a constructive dialogue. An inability to listen to those who don't agree with the government's key policies is also evident.
For many, there is already talk of a fracture, or even of a breakdown of the consensus that gave Chile its stability since the return to democracy in the early 1990s. This tone has been set from the president's La Moneda Palace itself, following an agenda more committed to an ideological approach than with a desire to continue the growth that has characterized recent decades.
It is true that it takes two to tango, and in this case the dancing companion should be the opposition. But in the absence of the latter — which is rather lost in its own infighting — the executive is setting the rhythm and style of music on its own. And this, to be sure, is very different from what we are accustomed to.
Until now, we have not seen a glorified "story" that, from the government itself, demonizes the opposition, even with advertising campaigns — as was done with a recent video on Tax Reform. The rhetoric of slogans dominates the government's discourse, blaming the "neoliberal model inherited from the dictatorship" for every single national problem, and trying to nullify some of the measures implemented by the previous administration. Keep in mind, the "model" under attack is that which her own New Majority coalition administered for nearly 20 years (1990-2010), legitimizing it in democracy and allowing it to shed the "original sin" of having been imposed by a dictatorship.
But that's not all. The figures also reinforce the popular notion that sequels are not good. Imports of capital goods have fallen by 22 percent, the index of industrial production by 5.3 percent, and manufacturing by 7.5 percent. Projected growth, recently forecast between 3 and 4 percent, is now down to between 2.5 and 3.5 percent of GDP. The price of housing has increased, and the unemployment rate is continued at around 6.1 percent, amid lower employment growth.
What do these figures mean? Basically, that uncertainty reigns supreme in Chile. For the first time since the growth trajectory was recovered in the mid 1980s, there are no certainties in our country. An eerie feeling of not knowing what comes next is installed in public opinion, especially regarding the major pillars of the proposed reforms: education, taxes, and a new constitution.
What will happen with education? No one knows. A discourse that started demanding free and quality education is today focused on transferring the ownership of subsidized schools from the private sector to the state. Even Ignacio Walker, president of the Christian-Democratic party — a member of the ruling coalition — has criticized the Ministry of Education, saying he does not understand why this ministry "became a real estate broker."
The ideological offensive is adamant on condemning profits. There is no serious discussion about quality, and major stakeholders are totally absent in the debate: teachers, parents, and students themselves.
In terms of tax reform, there is also no clarity whatsoever. There is a unanimous consensus about the lack of serious studies to measure the real impact of the reforms. The minister of finance, however, does not allow room for dialogue, and the Chamber of Deputies has offered a sad spectacle, refusing to conduct a serious discussion of what was being voted on. They approved the proposed reforms because "it had to be done."
Again, slogans seized the debate: "the rich should pay more" and "we should be more inclusive." Of course, all this creates uncertainty, especially for small and medium-sized enterprises, which are usually the ones who suffer the most from poor policy making.
The third axis, the constitutional reform via Constituent Assembly, is on hold for now, but not frozen. As a prominent professor who supports the government said: "This must be changed by hook or by crook."
Bachelet knows she does not have much time, and that she must take advantage of the electoral honeymoon to implement the reforms, betting all her political capital on achieving the most in the least amount of time. Unfortunately, those who think they can run over the minority simply because they won an election are wrong — at least that is not what it means to govern in a democracy.
But beyond the ideological aggression, we must not forget that Chileans voted for Bachelet, not for her government program. They were seduced by her charisma, her closeness and sympathy with the people, and by the construction of the myth that her previous government had been good.
In an editorial on Sunday, June 15, La Tercera newspaper claimed that "The urgency … has played against the quality and thoroughness of decisions. The abuse of the power conferred by the majority ended up building an image of unwillingness towards building a constructive dialogue, with the help of the abundance of unfortunate metaphors, such as bulldozers and backhoes."
Since 1975, when the economic recovery plan that facilitated the take off of the country was implemented, Chile, except for brief periods of time, has traveled a solid path of progress. But today it is facing a dilemma that deviates from a consensus, and towards a difficult crossroads. Is it perhaps going through the typical crisis we go through when we turn 40 years old? The typical midlife crisis that tests our capacity to make the leap to maturity?
We cannot truly say yet whether the sequel will end badly or not. But let's hope this is one of those movies that begins very badly, only to slowly captivate us and end with a grand finale. For now, we will continue to watch from the public square.
Translated by Alan Furth.